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This is when an individual keeps custody of the private key to his or her wallet (crypto wallet). It’s like when you possess the key to your locker or apartment. And as such, only you can gain access to the things in it. However, unlike the actual key, this “key” in a private key wallet is made up of random words, and they are referred to as “seed phrases.”
What Makes the Private Key Very Important
When someone owns a private key wallet, that person has an address on the blockchain, through which they can send or receive cryptocurrency. However, the owner of the private key can send the wallet address to a third party from which he or she wants to receive cryptocurrency.
Who Are Those That Have Access to Your Cryptocurrency?
Possessing your private key grants you the highest level of control over your cryptocurrencies. This, however, comes with the challenge of safeguarding your key. This is where the expression “not your keys, not your crypto” originates. This is because if anyone else should gain access to your private key and wallet address, such a person could easily steal your funds. If this is so, then what are the benefits of a private key?
Security Is the Main Benefit
Nobody except you, the owner of the private key, has access to your crypto. However, if a malicious third party should gain access to your seed phrase, then this security has been compromised.
Uses of the Private Key
One can use his or her private key wallet to send and receive crypto from an external address, exchange popular major cryptocurrencies, fund and receive from your trading account, and link one’s wallet to dApps (decentralized apps on iOS and Android).
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